There's often a strange symmetry between hiring and derailment in investment banking. In January 2007, Bear Stearns announced plans to hire 2,000 people and triple its number of staff in London. This followed the addition of 4,159 people globally at Bear Stearns over the previous three years. Lehman increased its headcount 38% between 2004 and 2007, adding 7,400 people. Merrill Lynch hired a massive 21,700 people in the 2004-2007 period.
Two years later, each of these firms had blown up.
Despite hiring in huge numbers, Barclays had proven immune to this rule of thumb. Between 2007 and the end of 2010, it hired 8,600 people, almost single-handedly keeping the London recruitment market afloat in the process. In August 2009, Bob Diamond said three quarters of BarCap's hiring was done. But by August 2010 it seemed to have added another 2,300 people. This year, Barclays has been cutting costs, but this hasn't stopped it from being at the top of the list of technology hirers, or seemingly releasing an additional 30-40 technology jobs in a single week in June.
Now, however, the balloon is burst. Knives are out for Bob Diamond's creation - and not just from anti-banking pundits and regulators. Former staff have been popping out of the skirting boards. A 'banker' told the Independent this weekend that there was a, 'dark side' to working for Barclays: "He spoke of management by intimidation, even physical threat, punishing hours and a ruthless grading system that left workers in terror of their annual appraisals. Employees were often reduced to tears by the end of a day, but only when they had departed from the building. Such weakness would not be tolerated inside."
Similarly, Martin Taylor, the former Barclays CEO who likes to have a pop at Bob Diamond whenever possible, has turned up in the Financial Times today suggesting that cultural problems at Barclays date at least back until 1998 when the bank took a big hit on Russian bonds because of lax internal controls under Bob Diamond's watch. If only Martin had got rid of him then, laments Martin.
But with the Barclays hiring engine out of action, who else will keep the sputtering London recruitment market afloat? It's a question with no easy answers. Much of the recruitment over the past few years has been reflected in faltering revenue growth and diminishing profits per head. Why hire when you have nothing to show for it? And more particularly, why hire in Europe when the European Union is threatening to massively increase fixed costs by equalising bonuses and salaries?
The most obvious conclusion is that there won't be any big hiring - just back filling and strategic additions here and there. Barclays may be the last of the big builds. And yet, there's always someone waiting in the wings. In this case, it may turn out to be Cantor Fitzgerald. Already equipped with a trading platform, Cantor is building a full service investment bank. It also appears to have the immense advantage of falling outside the FSA's tier one radar: headhunters say Cantor pays small salaries and big bonuses. Unlike big banks, it can therefore hire cheaply. Cantor is the new Barclays. Just a thought.